“Staggering lapse”: Renewal SA misplaces Tonsley contract

The State Government’s troubled urban development agency, Renewal SA, has been accused of a “staggering lapse” after “losing” a contract relating to the multi-million dollar Tonsley Park precinct.

Mar 10, 2016, updated Mar 10, 2016

The extraordinary oversight was outlined in evidence to parliament’s Economic and Finance committee last month by Auditor-General Andrew Richardson, who had earlier detailed various “non-compliance with procurement and contract management frameworks” in his annual report.

Richardson and Assistant Auditor-General Daniel O’Donohue told the committee the audit raised questions about a contract with a private sector company to develop the site, wherein the framework “to procure a service” had been all but ignored.

“A number of those [steps] hadn’t been met,” O’Donohue said.

“There was a procurement checklist that wasn’t used, the contract wasn’t disclosed on the government’s contract site – which would have been the expectation – and a couple of other issues of administrative nature hadn’t been followed either.”

Moreover, when the contract documents were requested by the Auditor-General’s office, “they weren’t able to locate [them] for us”.

Liberal MP Vincent Tarzia asked O’Donohue: “Do the documents exist? Are they lost?” to which O’Donohue responded: “Unfortunately, they couldn’t find them and provide them to us.”

“The agency has taken on board that they would retrain the staff involved in that area to make them more familiar with what the requirements are when they are entering into future contracts,” he said.

We are surprised if documents go missing and it does create quite a substantial risk

O’Donohue said he had no reason to believe the Tonsley innovation hub had been “compromised” by the oversight, because “the infrastructure that they were involved with was fully established, so it shouldn’t have an ongoing impact”.

But Richardson emphasised that it raised a “really fundamental” concern.

“We are surprised if documents go missing and it does create quite a substantial risk,” he said.

“If the state has lost the documentation that supports its position in a particular arrangement, then for us it is quite concerning… it is an area that we are doing a little bit more work on to just see how can we have that situation arise and what is the consequence of it.”

Tarzia questioned the “potential liability to the state if there is a contract out there that we don’t know anything about”.

“I have never heard of anything like that happening,” he said.

“It’s certainly not what you would expect,” Richardson agreed.

“Hopefully we won’t find that it’s something that has any pervasive outcome in the work that we do.”

Why, in light of Gillman, is administration transparency still an ongoing wound?

Tarzia told InDaily the lost documentation represented “a staggering lapse in compliance management and transparency”, demanding answers about the contract, including what funds were provided and to whom.

“Why, in light of the Gillman land scandal, is administration transparency still an ongoing wound for this Government?” he said.

“By losing or disposing of these vital documents Government may have seriously exposed itself to extraordinary civil liability.”

A Renewal SA spokesman told InDaily there were “a significant number of contracts involved in delivering such a complex and ambitious project” as Tonsley Park, which were “managed in accordance with Renewal SA procedures and policies”.

“However, we acknowledge the Auditor-General’s findings in relation to this one particular contract dating from June 2014,” the agency said in a statement.

“Since that time, Renewal SA has strengthened its procurement and contract variation internal control requirements to help ensure this is not repeated.”

It’s understood the signed paper version of the contract has never been located.

Renewal SA says the Government is “transforming Tonsley into a collaborative and high-value industry, education and residential precinct, where business people, researchers, tertiary students, industries and companies can interact”.

Its website puts the agency’s outlay at $253 million, with more than $1 billion of private investment.

The Government’s Urban Renewal Authority has been at the centre of a string of controversies, most notably the Gillman scandal, after which then-CEO Fred Hansen’s contract was terminated. A subsequent ICAC inquiry declared him guilty of maladministration.

Planning Minister John Rau has since spoken publicly about successful efforts to reform the agency’s culture.

Now Housing and Urban Development Minister Stephen Mullighan said today that the Government “always takes the concerns of the Auditor-General seriously”.

“I have been assured by Renewal SA that this was an isolated incident and that processes are now in place to prevent this issue repeating itself, and these procurements will be closely monitored to reduce any future risk,” he said in a statement to InDaily.

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“It should be noted that the contract dates from before John Hanlon became Renewal SA’s Chief Executive.”

The Auditor-General’s 2015 annual report noted Renewal SA had been “in the process of establishing an ownership framework since its establishment in March 2012” but “our follow-up in 2014-15 indicated the ownership framework was yet to be finalised and formally approved”.

“It is of particular concern that the URA has operated without an approved ownership framework for a period of more than three years,” it said.

“In the absence of a formal approved ownership framework, cabinet’s expectations regarding the URA’s role, functions and funding arrangements may be unclear… this may result in the URA not conducting its operations in accordance with government expectations.”

The same report detailed concerns over the Tonsley contract, noting that “a supplier performance scorecard had not been completed”.

“The URA was also unable to locate the signed pre-authorisation to enter into the contract, the final signed and executed contract and the signed contract disclosure form,” it said.

“Given these instances of non-compliance with applicable policy requirements, there is an increased risk the URA may not have obtained maximum value for money from the procurement contract.

“Our review of the Tonsley Park Redevelopment project risk register indicated that it may not have included all legal risks specific to the project, for example legal risks specifically identified by the Crown Solicitor’s Office or potential contract management and legislative compliance risks. Our review also indicated certain commercial risks may not have been reflected on the risk register.”

Renewal SA says it “comprehensively reviewed all legal and commercial risks” last August.

The latest revelation comes as the Renewal SA board’s presiding member, former Victorian education minister Bronwyn Pike, endured a torrid day fronting Melbourne’s Independent Broad-based Anti-corruption Commission.

Pike told the hearing yesterday she didn’t act on allegations of corruption linked to the tender process of a failed multi-million dollar Victorian Government IT project because it wasn’t her job.

She said she was first made aware of probity concerns about her friend, former education department deputy secretary Darrell Fraser, and the first tender process for the Ultranet IT project, in 2008 – but she was told the email that aired the concerns had come from a disgruntled bidder.

Pike said she forwarded the concern to the education department, as was normal process.

“I didn’t know who all the tenderers were because as a minister it’s not my job to know those things,” Pike said.

“The minister is very hands off and has the responsibility of setting policy.”

She told the hearing she was unsure what action came out of the complaint after she forwarded the email, but she expected the department would have acted if it was considered appropriate to do so.

Probity concerns were again brought to her attention by department auditor Ann Dalton, who believed Fraser was too close to the project.

As a result of that discussion Pike and then-education department secretary Richard Dawkins agreed to strengthen the board rather than ask Fraser to stand down.

Pike’s friendship with Fraser, which continued well after her time as education minister ended, was highlighted during the hearing numerous times.

Carrying prepared notes, Pike denied knowledge of Fraser’s alleged improper dealings and said she had been surprised when reading transcripts of the hearings over the past month.

“I was extremely disappointed to read those things … this is a project I believed in and thought would enhance education in Victoria,” she said.

Fraser, as well as a number of his education department colleagues, is accused of using the botched Ultranet project to benefit himself.

Fairfax reported today that a secret phone recording obtained by the Independent Broad-based Anti-Corruption Commission reveals Fraser telling Pike he had given $1 million to Ultranet provider CSG “on the quiet”, to which the former state Labor MP responded: “But you know how those things get blown up”.

Pike left parliament in 2012 and was subsequently appointed to the Renewal SA board.

-Additional reporting: AAP.

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